Aged care homes lose ground on care minutes
- Care minute compliance fell to 63.6% in the March quarter
- More than one in three homes remain non-compliant despite funding penalties
- Meeting care minute targets is reducing provider margins
- Some providers may absorb funding cuts rather than hire more staff
Fewer aged care homes are meeting the mandatory targets, despite new financial penalties for non-compliance.
The proportion of aged care homes meeting both total and RN care minute targets declined 3 percentage points in the March quarter to 63.6%, down from 66.81% in the December quarter, ending four consecutive quarterly gains.
For MM1 homes, compliance was 66%, down from 68% in the December quarter.
NWAU adjusted for non-complying homes
Mandatory care minute targets were introduced on 1 October 2023, but in 2024, financial pressures and recruitment challenges held rates of compliance with both total care minute and RN targets below 50%.
To improve rates of compliance, the Government announced changes to AN-ACC funding for metropolitan aged care homes in December 2024.
Since 1 April 2026, non-specialist MM1 operators have had their National Weighted Activity Unit (NWAU) weighting adjusted according to a sliding scale determined by compliance with the mandatory care minute targets.
In other words, non-specialist aged care homes in MM1 regions that don’t meet mandatory care minute targets have had their Government funding reduced.
Despite these penalties, the latest data shows 37% of aged care homes remain non-compliant, and even MM1 homes are seeing lower rates of compliance.
Compliance impacts margins
Providers meeting or exceeding the care minute targets report lower direct care margins on average, according to UTS Ageing Research Collaborative (UARC)’s Australia’s Aged Care Sector: Full-Year Report 2024-25.
The finding is backed up by StewartBrown’s 1H 2025-26 residential aged care survey, which showed a significant decline in direct care margins due to higher rates of direct care staffing. Staffing costs outpaced the additional AN-ACC funding provided to cover them.
This creates a financial conundrum for operators, which evidence shows often use care margins to cross-subsidise losses in accommodation and everyday living.
Meeting the care minute targets requires significant additional costs, and some providers may conclude the cost of employing more staff outweighs the value of the direct care supplement.
Earlier this year, UARC estimated that metro aged care operators could lose up to $33.41 per resident per day in Base Care Tariff (BCT) funding from 1 April if they don’t meet the targets.
Professor Mike Woods, UARC Chair and Professor of Health Economics at UTS, told The Weekly SOURCE the Government is funding aged care providers to achieve the mandatory targets, and operators should be aiming to comply.
